3 Things You Need to Turn a Demand Response Pilot into a Program

Raise your hand if your utility has tested a demand response pilot, a once-promising initiative that never quite made it to full-fledged program status. Okay, now everyone can put their hands down.

It’s a pretty universal truth that when you set up any demand flexibility initiative—including a demand response pilot program—the organization’s focus easily can be shifted from achieving broad-based improvements to judging the success of the pilot. And then, without the support and planning it needs, the pilot dies. Instead, utilities should be thinking about how to build pilots that spark true innovation so they can bring much-needed benefits to your company, your customers, and our environment. There are three key ingredients to making this happen.

1: Mandates (From Demand Response Pilot to Program)

Yes, it’s necessary to have the backing of state utility officials, but that regulatory mandate is not enough to ensure successful demand response pilot—and then program—implementation.

First, you need commitments at the highest levels to create lasting change. Those in the C-Suite must work hard to create organization-wide alignment among all employees for new initiatives. And they need to work even harder to ensure understanding and commitment to the program’s long-term goals with their customers.

In 2019, U.S. states and utilities made more ambitious clean energy commitments than ever before. Many have pledged to achieve 50% or even 100% clean energy in the coming decades. These efforts are doomed if policymakers, public utilities, and the people they serve are not all solidly on board.

2: Organizational Innovation

Don’t confuse a demand response pilot program with true innovation.

Way back in 2012, in an article titled “Just Say No to Utility Pilot Programs,” Ahmad Faruqui, principal of The Brattle Group, argued that piloting should not be the end in and of itself. “The time has come to stop the pilots,” noted Dr. Faruqui, who was the keynote speaker at Virtual Peaker’s a title=”Policy, Technology, and People: Sampling Virtual Peaker’s Innovation Forum” href=”https://virtual-peaker.com/blog/policy-technology-and-people-sampling-virtual-peakers-innovation-forum/” target=”_blank” rel=”noopener”>second-annual Innovation Forum last fall.

Innovation permeates through organizations that prioritize its value at the highest levels, and then devote the resources to cross-pollinate. Those that just hire an innovation officer or even an innovation team, but then don’t champion their efforts, risk creating innovation silos. And innovation silos are where demand response pilot programs go to die.

3: Robust, Scalable Partner Networks

How scalable is your operation? To make a demand response pilot successful, the technology must be robust and based on the needs of your customers. And it must be simple and understandable.

“I like to use the example of a supermarket to explain what scalability means in the most simple terms,” noted Andreas Grabner of software intelligence company Dynatrace in a recent Forbes article.

”A supermarket can handle scale (in this case, that means more customers at 6 p.m. after work or on Saturday mornings, or whenever customer numbers spike upwards) by putting additional cashiers on the cash registers, or it can do this by installing and firing up more automatic self-service tills. Essentially, the supermarket is able to adjust its operational approach to handle more throughput from the same core estate of business (assuming it has also provisioned for product stock levels) ensuring that customers always experience the same shopping experience (the time it takes from entering to leaving the shop) regardless of whether it is super busy, or very quiet.”

To extend the supermarket analogy to utilities, engaging with technology partners like Virtual Peaker can open up the aisles to make sure you can deliver the right amount to the right customers at the right price at the right time.

Green Mountain Power, a long-time partner of Virtual Peaker, is about to kick off two first-in-the-nation home energy programs with residential customers in Vermont who want to own or lease a backup battery. The program looks promising because GMP has met the three criteria—mandates, innovation, and scalability—we’ve been discussing.

GMP’s customers want to reduce carbon emissions and improve the delivery of reliable, renewable energy. At GMP, innovation permeates all levels of the organization. And, when needed, GMP seeks out technology partners like Virtual Peaker to ensure that promising demand response pilots turn into successful programs.

Thinking about piloting a program? Contact us below to talk about how we can help.

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About The Author
Jeff Quigley blog author

Jeff is the VP of Sales for Virtual Peaker. He has spent his entire career in energy and data analytics where he has led teams working with utilities, government agencies, oil and gas companies, and financial institutions to help drive growth strategy and manage energy transition. He has worked with a team of analysts in developing an integrated resource plan (IRP) for a major U.S. vertically integrated utility, with a focus on load forecasting, locational marginal pricing (LMP) prediction, and long-term grid reliability. He has also managed the development of marketing and growth strategy for one of the four largest global oil and gas firms with a focus on the long-term viability of the Asian market-entry strategy.

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